JERUSALEM
— THE latest focus of Palestinian resistance against Israel - expansion of Jewish settlements on the occupied West Bank - has begun to overshadow the 16-month-old peace process here.

``It's a make or break point,'' says Hanan Ashrawi, the former Palestine Liberation Organization spokeswoman who now heads an organization that monitors human rights issues in the Palestinian self-rule areas.

Today, Palestinians will hold protest marches near three West Bank settlements, including in Hebron, where Jewish zealots maintain a symbolic settlement in the center of the Palestinian town.

Just as that intifadah paved the way for the peace accord with Israel, Palestinian leaders are hoping that a renewed grass-roots campaign will bolster their efforts to negotiate a Palestinian state with Jerusalem as its capital.

Two peoples claim one land

In recent weeks, Palestinian farmers have begun planting olive trees on vacant land close to Jewish settlements, and plans are being discussed to stage symbolic ``occupations'' of confiscated lands.

``It's not even a political issue ... it's a visceral issue,'' Mrs. Ashrawi says. ``In a land-for-peace equation, it is quite clear that without the land, there can be no peace.''

Western diplomats fear that violence will increase even with a ``peaceful'' resistance campaign.

Under the 1993 accord, it was agreed that the final status of West Bank settlements and Jerusalem would be the subject of negotiations due to begin in May 1996 and must be finalized by 1999.

But Israeli Prime Minister Yitzhak Rabin undertook to halt the expansion of ``political'' settlements - those that are created to frustrate the return of Arab land - rather than those created to further Israel's security effort.

At meetings in the self-ruled Jericho area and the West Bank town of Ramallah last week, a wide spectrum of Palestinian groups reached a rare consensus to resist the expansion of settlements and win Arab and international support for the cause.

Representatives of the Islamic Resistance Movement, Hamas, are party to the consensus, but militant Hamas leaders have indicated that they will go further.

The Hamas plan will include acts of sabotage against settlements, including the destruction of water pipes and the slashing of electric border fences.

Leaders of the Palestinian Authority (PA) - set up to administer Palestinian self-rule - are divided over how far the campaign should go. But PA Planning Minister Nabil Shaath insists that Palestinians are committed to a peaceful resistance.

Palestinian leaders argue that Israel has contravened the spirit of the accord by failing to halt the expansion of settlements that have grown by more than 5 percent since the accord was signed.

``It is clear that Israel has been negotiating in bad faith,'' Ashrawi says. ``Neither the PA nor the negotiating process has been able to curb the expansion of settlements.''

Appealing to US

Palestinian leaders are aiming their international campaign at the United States, which, they say, alone has the power to influence Israel on the settlement issue.

Last week, PLO Chairman Yasser Arafat asked the US to intervene to stop Israel from expanding and funding settlements ``out of concern for the peace process.''

US State Department spokeswoman Christine Shelly conceded that the settlements were a ``problem,'' but called on the parties to deal with the issue under the peace accord.

The US reiterated its commitment to support all aspects of the Declaration of Principles accord, which was signed on the White House lawn.

``It is absolutely critical that the US government make a clear and unambiguous public statement regarding the illegality of Israeli settlement activity,'' says Fateh Azzam, coordinator for the Palestinian human rights group, Al-Haq.

Over the weekend, settler leaders called on residents to bar US diplomats from entering their premises.

Al-Haq said Israel's land seizures on the West Bank are in contravention of Geneva Conventions and other provisions of international law governing the conduct of occupying powers. But Israel justifies the seizure of ``state land'' under quasi-legal procedures it enacted after the 1967 Arab-Israeli conflict.

Jewish settlements on the West Bank have no difficulty gaining approval for expansion plans, whereas Palestinians, even those who can show title to their land, are routinely refused permission to build.

Those who build houses without planning permission frequently have their homes demolished by the Israeli military.

In Jerusalem, the pace of settlement has continued unabated, and more Jews (160,000) than Arabs (about 150,000) now live in Arab East Jerusalem, which was annexed by Israel in 1967.

The present impasse between Israel and the PLO is over the extent of withdrawal of Israeli forces from the West Bank during the next phase of the agreement that requires the redeployment of troops away from Palestinian population centers ahead of elections for a self-rule council.

Mr. Rabin's attitude to settlements is ambivalent: He has made it clear that he wants a ring of settlements around Jerusalem, housing some 35,000 Jewish settlers, to become part of a ``Greater Jerusalem,'' which will remain as the capital of Israel.

Mr. Arafat insists, on the other hand, that Jerusalem should be the capital of a future Palestinian state.